Continuing the trend observed in Q1 2019, M&A activity within the sector continues to trend downward compared to prior years driven largely by volume of activity (YTD June 19 down 15% versus 2018 YTD June). While overall activity is down, Q2 2019 overall deal value climbed 17% versus Q1 2019, a historically seasonal trend observed (YTD June 19 value is down 17% versus the same YTD June period in 2018). Similar themes observed over the last six months continue to weigh on M&A within the sector. Ongoing geopolitical tensions and concerns about the economic outlook are overshadowing otherwise positive macro factors for the sector which create opportunities for growth and historically have driven M&A (i.e., infrastructure needs). Absent significant movement toward resolving some of the more significant events contributing to the geopolitical tensions, we are likely to see a continued drag on M&A activity compared to historical periods.
“Q2 2019 M&A activity increased compared to Q1 2019, but continues to lag historical periods reflecting the ongoing impact of geopolitical tensions and overshadow macro factors otherwise positive for the sector.”